Q4. The Salalah cold stores' (SCS) returns on the shares are shown in the table below, together with the probability of when a particular weather event may occur. Event Probability Returns on shares in SCS (%) Hot weather 0.2 20 Modestly warm Cold weather 0.2 0.6 5 -10 1.0 Calculate: (a) the expected return of SCS? (b) the standard deviation of that return of SCS? Q5. Mr. Gill has inherited the following portfolio: Share Share price No. of shares Beta ABCple 1.50 20,000 0.70 DEFplc 2.50 10,000 1.20 GHIple 1.80 20,000 1.10 What is the beta on this portfolio? b. If the risk-free rate of return is 7.5 per cent and the risk premium on shares over Treasury bills has been 6 per cent what is the expected return on this portfolio over the next year? Q 6. Discuss the main assumptions of CAPM theory and list its practical problems